The complicated process of obtaining building permits, along with other factors of slow construction, makes the Czech Republic less attractive for investment in housing construction. Investors could start to focus on construction in other countries with less complicated permitting processes. This follows from an analysis by the Czech Chamber of Commerce available to the Czech Press Agency. According to the report, the slow construction of flats is caused by lengthy building permits, a shortage of labour in the construction sector and a lack of graduates in construction. Construction is also made more expensive by the compulsory participation of investors in the development of the area and new EU requirements related to energy efficiency.
“None of these problems is temporary and therefore will not correct themselves without drastic changes. Without the adoption of a comprehensive concept and strategy leading to a systemic support for the creation of new housing in the Czech Republic, its unaffordability will continue to deepen,” said Zdeněk Zajíček, President of the Chamber of Commerce.
In addition to simplifying legislation, the Chamber of Commerce said the state should strengthen domestic production of building materials, expand the range of sites suitable for development, such as brownfields, expand high-rise development and speed up the hiring of foreign workers.
It should also allow investors to deduct the cost of schools or other public buildings, which are often a condition for building new housing in the investor participation methodology. Because of this, developers must provide public buildings or provide financial compensation to the city when building their projects. This, according to Roman Rend, an analyst at the Chamber of Commerce, increases construction costs, which are then reflected in the price of real estate.
“A concrete solution to make the price of apartments cheaper while maintaining investors’ participation in the development of the area is for investors to pay taxes only on the apartments, not on the value of the related amenities, the delivery of which is itself a kind of tax in kind,” Renda said.
The chamber said development can also be boosted by, for example, creating pension or insurance funds to allow more people and investors to enter the housing market. The chamber has previously reported that the state should also improve the building of transport infrastructure to facilitate travel to work and between regions and increase the availability of rental housing.
“If we don’t make a quick turnaround, we will be doomed to fall behind other countries economically in terms of housing unaffordability, among other things, as well as huge prices for new housing that few will be able to afford,” Zajíček said.
Source: Czech Chamber of Commerce and CTK
